USDJPY long term view and short term trade set-up.

USDJPY had a long run up, but looking at the monthly chart we think it is time for it to retrace to at least 88 before deciding on the trend. The main reasons we see the turn – 50% retracement level against Jun 2007 tops, running into dinamical resistance of 200 Monthly MA and significant overstretch in buying momentum. Supported by bigger picture we are now looking into recent developments on the 4H chart.

Even though the speed of falling was not that impressive in the past weeks, the pair stalled at 50% Fib (see the chart) and failed to produce a higher peak than the previous one. Which shows that bears are still dominating the market and can push the pair to 86-88 level as monthly chart suggests. We entered the short trade this morning around 98 level, targeting a mid-term structure with 94 Profit levels to start with. The whole trade is at risk at themoment as 1 Hours chart still did not produce a valid lower low to signify the change of trend on a smaller scale. So we keep an eye on 99 level as potential Stop Loss and watch stocks to develope into more convincing pattern.